Why The United States’ Strategy Against Huawei Has Backfired

Why The United States' Strategy Against Huawei Has Backfired

Recently a friend asked me about Huawei and to explain why the name continues to be in the news.

My answer: “It’s like watching a reality TV show. There is no shortage of drama and it’s more entertaining than I care to admit.”

In May, President Trump signed the “Executive Order on Securing the Information and Communications Technology and Services Supply Chain.” The order “declares a national emergency with respect to the threats against information and communications technology and services in the United States and delegates authority to the Secretary of Commerce to prohibit transactions posing an unacceptable risk to the national security of the United States or the security and safety of United States persons.”

In my opinion, the executive order was much more about protectionism than it was about national security. It was a move in the making for more than a decade, concocted by the largest communications infrastructure companies in the world, and it was designed to stifle open competition and enable these organizations to fight for dominance both domestically and in the global market.

I have worked in the networking infrastructure industry for more than 25 years, which included a rotation in Hong Kong as senior vice president and general manager of an incumbent networking vendor’s $1-billion business across Asia Pacific, Japan and Greater China. During this time, I became intimately familiar with Huawei, how it conducts business and what it’s like to go toe to toe with the formidable networking giant.

To be clear, I am not suggesting Huawei is innocent by any stretch. But what most people don’t realize is that, starting in the early 2000s, large networking companies spent considerable time and money lobbying to prevent Huawei from building a technology presence in the United States.

They also spent considerable time and money building global marketing campaigns designed to undermine Huawei in the U.S. and international markets, something that more than a decade later continues, and was on full display at Mobile World Congress this February. What we are seeing play out is a technology cold war between China and the United States, culminating in the fight for 5G contracts around the globe. Simply put, billions of dollars are at stake.

What became increasingly clear to me in my time in Asia is that just as we in the United States hear about security concerns regarding Huawei products, in other countries those same concerns exist about American multinational networking companies, with questions regarding if products can be trusted, and whether networks are safe and secure when U.S. equipment is used. I spent years growing a U.S. multinational’s footprint and revenue across Asia Pacific, including in China, and the pushback at times was considerable.

Outside of the United States, many have great respect for Huawei and view them as a trusted vendor. Huawei offers innovative technology without a premium price tag and for many countries in the world the perceived risk is dwarfed because the price is right.

Huawei does more than $100 billion in U.S. revenue — yes $100 billion! — a fact that most American’s are unaware of. That’s a company with revenue greater than Cisco, Juniper Networks and Arista Networks combined. Clearly, not everyone thinks they are as evil as depicted in the U.S. media.

And so, more than a decade later, the political infighting continues, and it’s fundamentally changing the tenor of the technology discussion. But we — you, me, every person who uses a communications device in the world — should be concerned and pushing for open competition so that we have the best communications experience possible. Why? Because it starts with infrastructure.

What people may not understand about the process of building 5G networks is that even if a country chooses not to build its 5G network with Huawei infrastructure, there is a good possibility that its 4G network does include Huawei infrastructure. 5G networks will be built on top of pre-existing 4G networks, and it is unlikely any country, state or city will rip out the pre-existing Huawei-based 4G Network, meaning Huawei will still be in the network. So, the security argument is likely moot in most cases.

The strategy to block companies like Huawei from the networking business was doomed from the beginning — simply because the U.S. view of Huawei is not shared by a substantial part of the rest of the world. Huawei is pervasive in much of the world’s communications infrastructure.

While networking behemoths continue to go tit for tat in global public relations smear campaigns and in courts of law, we should all be pushing for open competition, because what is continuing to unfold is having a detrimental impact on U.S. companies and their ability to scale outside the United States and remain competitive on a global stage.

The result is a negative impact on mutually beneficial technology transfer. I argue that neither China nor the United States is getting the benefit of technologies built domestically and sold internationally.

The simple truth to what is unfolding right now is that geopolitical tension is bad for innovation — and it is at your expense and mine.

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